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Choice Hotels International, Inc. announced today its intentions to acquire all of the outstanding shares of Wyndham Hotels & Resorts, Inc. in what amounts to a hostile takeover. Choice Hotels® plans a price of $90 per share, paid in a mix of cash and stock.
The budget hotelier has a portfolio of around 7,500 properties. Wyndham holds 9,280 locations and bills itself as the largest hotel franchisor in the world. The combined portfolio would have over 16,000 properties across 42 brands. Choice Hotels® acquired Radisson Hotels Americas in 2022 to bulk up its portfolio. For context, Marriott International has around 8,500 hotels, Hilton Hotels & Resorts has over 7,000, and Hyatt Hotels Corporation reports around 1,350.
This deal values Wyndham around $7.8 billion on a fully diluted basis. With the assumption of Wyndham’s net debt, the transaction is valued around $9.8 billion. Choice Hotels® says that this is a win for shareholders and franchisees. For shareholders, the price offered represents a 26% premium to Wyndham’s 30-day volume-weighted average closing price ending on yesterday, an 11% premium to the 52-week high, and a 30% premium to the latest closing price. For franchisees, there is the drive from increased marketing and a combined loyalty program as well as cost savings, operational efficiencies, and more.
Patrick Pacious, President and Chief Executive Officer of Choice Hotels, said:
We have long respected Wyndham’s business and are confident that this combination would significantly accelerate both Choice’s and Wyndham’s long-term organic growth strategy for the benefit of all stakeholders. For franchisees, the transaction would bring Choice’s proven franchisee success system to a broader set of owners, enabling them to benefit from Choice’s world-class reservation platform and proprietary technology to drive cost savings and greater investment returns. Additionally, the value-driven leisure and business traveler would benefit from the combined company’s rewards program, which would be on par with the top two global hotel rewards programs, enabling them to receive greater value and access to a broader selection of options across stay occasions and price points.
A few weeks ago, Choice and Wyndham were in a negotiable range on price and consideration, and both parties have a shared recognition of the value opportunity this potential transaction represents. We were therefore surprised and disappointed that Wyndham decided to disengage. While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies’ franchisees, shareholders, associates, and guests to not continue pursuing this transaction. Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it.”
Wyndham’s management has been opposed to the acquisition, so we’ll need to see how this all shakes out and if the deal goes through.
Anthony’s Take: If this deal closes, the combined portfolio will be massive. I can’t say I’m particularly excited about any of the properties, but if you’re loyal to either of these groups this could be a win.
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